Shares of Coinbase were down as much as 5.5% in early trading on Friday.
“We think Coinbase (COIN) likely faces a number of new headwinds over the near/medium-term due to the recent collapse of rival crypto exchange FTX,” analysts led by Jason Kupferberg wrote in a note to clients.
They added: “As a result, we downgrade COIN to Neutral from Buy and reduce our estimates. We feel confident that COIN is not ‘another FTX’ (only $15M of deposits on FTX platform per a Coinbase blog post and $5B of cash on hand as of 9/30), but that does not make them immune from the broader fallout within the crypto ecosystem.”
Bank of America now has a $50 price target on shares of the crypto exchange operator, down from $77 previously.
Coinbase shares have lost more than 30% so far this month. Year to date, the stock is down around 80%.
In its downgrade of the stock, Bank of America cited an interview Coinbase CFO Alesia Haas gave to The Wall Street Journal this week in which Haas said a “material decline” in the price of bitcoin (BTC-USD) would have an impact on the company’s results.
As of Friday morning, bitcoin was trading near $16,600, down 13% in the last month and about 65% so far this year.
On Thursday, FTX’s new CEO, John Jay Ray III, slammed the company’s processes and controls under founder and former CEO Sam Bankman-Fried, writing in part, “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”
Ray was responsible for winding down Enron after its bankruptcy in 2001.